Auditing Promotes Honesty

As a result of my work as a Certified Public Accountant I have come to appreciate the value of clearly defined systems and procedures within a company. I have learned internal controls are both necessary and valuable. Without them, the integrity of both employees and the company are threatened. During my early career I faced several negative experiences that caused me to start to question whether it was my responsibility to enforce controls. Often I found myself feeling apologetic for many of the systems and procedures, and was sympathetic with people’s basic dislike for them.

Then I had an experience that changed my whole perspective. This incident occurred when I was asked to audit the books for a mid-sized organization. During the audit I discovered that two funds had significant problems, and were missing both money and equipment. I also discovered the person previously responsible for these funds had retired a short time earlier. Our internal investigation revealed that this woman did take the money and assets. It was also decided that this woman would be prosecuted. It took four years to resolve the case, and during these four years between arrest and final disposition, this woman essentially lost everything; her husband, her home, and her many friends. Looking back, this was a situation primarily brought about because of poor internal controls and no systems of accountability. Had that organization had a strong system of internal controls and accountability, all indications were that this woman would have most likely remained on the “right side of the fence”. Opportunity to commit fraud was simply too great.

In the years since this first incident occurred, I have heard about many other similar type tragedies.  Although the cast of characters and the setting are different, the same tragic plot has unfolded time after time. Inadequate controls have seduced all kinds of employees from sales clerks and secretaries to comptrollers and financial vice presidents. And although I do not excuse them for succumbing to the temptation, it is equally obvious that the temptation did not have to exist.

My experience with that one organization changed my attitude regarding the importance of any company having a good system of internal controls. No longer do I feel apologetic when I tell executives they need clearly defined systems and controls or when I tell employees that certain procedures must always be followed to the letter. My attitude regarding these safeguards has made a complete turnaround. Rather than being something unnecessary and/or inefficient, I see them as essential and beneficial to both the individual and organization. When people tell me they resent their company’s controls and find them inconvenient and irritating, I simply ask myself how resentful would they feel if they saw their life destroyed like that woman’s life was. $


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